Kewalo Basin’s future at stake

The state and boaters are still in a tug of war over harbor control

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» Boaters’ suit against state still on appeal

STORY SUMMARY »

A state agency is poised to take over management of Kewalo Basin boat harbor as its longtime occupants continue to wage battle against the impending changes.

The Hawaii Community Development Authority believes it must take over the management of Kewalo from the state Department of Transportation because the harbor was transferred to it in 1990.

It has a new set of rules that will raise mooring fees in order to fund badly needed repairs and improvements to Kewalo Basin at an estimated cost of $4.9 million.

HCDA Executive Director Anthony Ching believes that if "(we) build it, they will come." He says the agency envisions a new harbor with floating aluminum docks, better pedestrian and vehicular access and security as well as possibly a fuel dock, rest rooms and a fish auction once again.

But the existing boat tenants, which include a mix of commercial fishermen, charter sports fishing, diving and whale-watching operators who have been there for generations, say their future is at stake.

Under the new rules set by HCDA, the boaters say that their mooring fees will not only go up, but that terms will change so that they eventually will be replaced by private, luxury yachts.

The tug of war over the future of Kewalo Basin has carried on for three years, encompassing numerous meetings, a lawsuit under appeal, and even a change in HCDA's executive director.

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A year after first announcing it, the Hawaii Community Development Authority says it is moving forward with plans to take over management of Kewalo Basin boat harbor.

Anthony Ching, HCDA's executive director, said the agency anticipates taking over the management of Kewalo harbor in the first quarter of 2009.

When it does, it would become the first state redevelopment agency to manage a public commercial boat harbor. Under HCDA, the harbor is expected to fall under a new set of rules that would raise mooring fees and change existing lease terms.

The agency says the higher fees are necessary to fund badly needed repairs and improvements to the harbor.

But a group of 40 boaters who have organized themselves as Kewalo Ocean Activities - or KOA - say the agency's intention is really to kick them out in order to transform the commercial fishing harbor into another Ko Olina.

The agency's determination to move forward is the latest twist and turn in a tug of war over management of the harbor that dates back to 2005 and has involved numerous task forces, meetings with stakeholders - even a lawsuit and a change in HCDA's executive director.

KOA filed suit against the state last year, and although a judge dismissed it in February, the suit is now under appeal.

HCDA seeks to charge an overall 12 percent increase for inflation. In addition, a new two-tiered system also would raise boat-slip fees for commercial fishermen from about $5 to $7 a foot to between $10 and $13.20 a foot for those using improved slips. For charter boats, rates are typically double commercial fishermen's rates.

Longtime boaters at the basin, meanwhile, say their livelihoods are threatened by HCDA's management, given that the agency not only wants to increase boat-slip rents that put them at a competitive disadvantage, but create a new permitting system that leaves them vulnerable to being displaced.

Capt. Mike DeRego, second-generation owner of Inter Island Sport Fishing, which does business as Maggie Joe, has been at the harbor 58 years and said the concerns of the boaters seem to have fallen on deaf ears despite numerous meetings with HCDA.

"I think they're just going to slam it down our throats," DeRego said. "I think we're being run over. It's a sad day for small businesses in Hawaii. Kewalo Basin, as it is with its charm, is not going to stay."

yachts moving in?

Kewalo basin is currently home to a mix of charter boat operators, commercial line fishermen, diving boats, whale-watching boats, sunset cruise catamarans, and a few parasailing companies.

"As a small businessman, that's the only harbor we can afford," said DeRego. "There is no other harbor."

The higher fees will put boaters at Kewalo at a competitive disadvantage with other commercial boat operations, said DeRego.

But the higher slip fees are not as much of a concern as the rules, he said, which give HCDA executive power to revoke leases or make the changes that it deems necessary.

These loopholes do not currently exist under the existing permit from DOT, he says.

The current permit application slip from DOT is one page long. The new one proposed by HCDA is seven pages long and still open-ended, he said.

KOA representatives DeRego, Gary Dill of Imua Fish and Trading Inc. and Reggie White of Paradise Cruise Ltd. acknowledge that they have had three meetings with HCDA since Anthony Ching became the new executive director.

But no further changes have since been made to the proposed administrative rules, they said, which is why they feel the meetings have been one-sided. They continue to distrust the agency and believe it does not have the experience to manage the harbor.

The trio says this is really a battle in which a public harbor is being taken over in order to cater to wealthy owners of private yachts. This is apparent, they said, with General Growth Properties' plans to build residential condos across the street.

In its Ward neighborhood master plan, General Growth envisions a 3.25-acre grand plaza that stretches down to the harbor, opening up a view corridor from mauka to makai.

Ching said he has made it clear, however, that HCDA supports the existing commercial harbor activities at the basin and has established that as a guiding principle.

The slips are available on a priority basis, said Ching, to charter fishing operations and commercial fishermen first. Pleasure craft must sign up on a separate wait list that is only considered after the first wait list is filled, he said, but they will be allowed into the harbor if there are vacancies.

The boaters, however, say longline fishermen on temporary leases could get bumped from their slips because many are out to sea for months at a time. To ensure they don't get displaced, they asked that commercial boats have priority for a slip occupied by a pleasure craft.

But that was turned down by the agency, said DeRego.

Both Gill and DeRego, experienced fishermen, also warned that the harbor is ill-suited for pleasure craft, with its rough surf and narrow entrance.

Build it so they'll come

Ching said his philosophy for Kewalo Basin is: "Build it and they will come," echoing the line from the "Field of Dreams."

He said the agency plans to commit $4.9 million from revolving funds to fix three piers, install new floating aluminum docks as well as new utilities, add restrooms, a bait shop and possibly bring back the fish auction.

Top priorities also include improving pedestrian and vehicular access to the harbor, along with security enhancements.

But those funds - which come from revenue generated within the Kakaako district - will need to be paid back, with interest, over 25 years.

"Kewalo Basin is the only commercial harbor of its kind in the state of Hawaii," said Ching. "The harbor has been historically designed and operated as a commercial harbor serving as a safe haven for commercial fishermen, tour and excursion operators and the charter fleet. The HCDA will operate this unique harbor on a priority basis for those purposes."

He anticipates these improvements to the harbor will be completed in 2010.

The current set of proposed administrative rules were first drafted under the leadership of former HCDA Executive Director Daniel Dinell, who left the position to work at Hilton Grand Vacations last August.

The proposed rates are reasonable, according to Ching, given that it's roughly a 12 percent increase after 12 years. Tenants of Kewalo basin have not had any fee increases since 1996.

Also, HCDA last year did eliminate proposed maintenance fees in addition to minimum gross revenue requirements last year after meeting with stakeholders.

Originally, the agency proposed increasing percentage of revenue owed by commercial boaters from 2 to 4 percent, but brought it back down to 2 percent.

HCDA says it also plans to hire an experienced harbor manager through a competitive bid process

"We've done everything we possibly could to understand their concerns and ensure we are sincere in making the harbor an asset that works for people," said Ching. "We're putting our money where our mouth is."

The authority expects to vote whether to approve a set of proposed administrative rules at its next meeting on Sept. 3, which will then go to Gov. Linda Lingle for her approval.

Timeline for Kewalo Basin May 1990 Legislature transfers ownership of Kewalo Basin to HCDA. April 2001 Deed transferring Kewalo Basin is recorded. Dec. 2005 Task force is formed to draft rules for managing Kewalo Basin. Fall 2006 Preliminary plans for Kewalo Basin presented at HCDA meeting. Meetings held by Kewalo Advisory Group. March 7, 2007 First public hearing on proposed rules. March 30, 2007 Kewalo Ocean Activities incorporated to represent boat-slip tenants. Aug. 2007 KOA files suit seeking a declaratory judgment and injunctive relief. Sept. 1 2007 The date that HCDA originally expected to take over management of the basin, postponed from July 1. Feb. 2008 Circuit Judge Karen Ahn dismisses the suit. KOA files an appeal. May-June 2008 HCDA says it has conducted three meetings with harbor stakeholders. July 16, 2008 Small-business regulatory review board recommends that Gov. Linda Lingle approve the proposed administrative rules. Sept. 3, 2008 HCDA board expects to vote on the rules. If approved, they go to Lingle for her signature. 2010 Anticipated completion date for harbor improvements.